County of Camden v. FCR Camden, LLC
| Decision Date | 09 July 2021 |
| Docket Number | A-2324-19 |
| Parties | THE COUNTY OF CAMDEN, Plaintiff-Counterclaim Defendant-Appellant/ Cross-Respondent, v. FCR CAMDEN, LLC, d/b/a "RECOMMUNITY," Defendant-Counterclaim Plaintiff-Respondent/ Cross-Appellant. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 1, 2021.
On appeal from the Superior Court of New Jersey, Law Division Camden County, Docket No. L-3142-19.
Joseph T. Carney argued the cause for appellant/cross-respondent (Brown &Connery, LLP, attorneys; William M. Tambussi and Joseph T. Carney, on the briefs).
Ross A. Lewin argued the cause for respondent/cross-appellant (Faegre Drinker Biddle & Reath, LLP, attorneys; Ross A Lewin, of counsel and on the briefs).
Before Rothstadt, Mayer, and Susswein Judges.
In this Declaratory Judgment (DJ) Act action, N.J.S.A. 2A:16-50 to -62, plaintiff, the County of Camden and defendant, FCR Camden, LLC d/b/a ReCommunity (FCR), appeal from portions of the Law Division's January 3, 2020 order that granted in part and denied in part the parties' summary judgment motions. The parties' dispute arose in 2019 after FCR notified the County of its intention to enforce its alleged contractual rights and implement certain changes to its procedures for handling loads of purported recyclable material. FCR had agreed to accept and market these materials under a publicly bid contract the County awarded FCR in 2017. The focus of FCR's 2019 notification was its right to reject loads the County delivered to FCR's facility that contained more than eight percent of nonconforming material. [1] After considering the parties' summary judgment applications, the motion judge entered an order that determined the parties' obligations and rights under the contract in part, while expressly declining to address certain matters about which the judge found there was no justiciable controversy.[2]
On appeal, the County contends that the motion judge erred by granting summary judgment to FCR, defining FCR's right to reject nonconforming loads, and finding that FCR did not waive its right to do so. In its cross-appeal, FCR argues that the motion judge erred by concluding that it did not have a right to terminate the agreement upon a material breach of contract arising from the County's delivery of excess nonconforming materials. FCR contends the motion judge failed to accept that every party to a contract has the right to terminate a contract that has been materially breached.
For the reasons that follow, we affirm most of the challenged order as modified by us, but reverse the determination as to the issue of waiver because it was not ripe for disposition on summary judgment.
I. Most of the material facts on summary judgment were undisputed. They are summarized as follows.
In 2017, the County issued a request for proposals (RFP) to secure a contractor to receive and market the County's and its member municipalities' recyclables.[3] Prior to the RFP FCR had provided those services to the County and participating municipalities in the County since 1993.
The RFP provided a specific definition for recyclable materials that included paper, glass bottles and containers, mixed plastic containers, "aseptic packaging, aluminum[, ] and ferrous containers." The RFP also included a list of information that responding contractors had to provide in their proposal. Among the required information was that proposals include "[a]ny causes for rejection of loads." It also asked that proposals include the "[a]verage residue percentage resulting from proposer's processing of recyclable materials" and "[a]ny payments due [to the] [p]roposer for residue disposal."
The RFP also addressed Average Commodity Revenue (ACR), which according to the County, was the "average price received by the proposer for the recyclables." The ACR would in turn be used to calculate the amount of revenue a successful proposer would share with the County and its members. The RFP specified that a proposal must state the "[b]asis for determining [ACR] Threshold (recyclable material composition studies, national index, etc.)." It also made clear, in bold and underlined text, that "[f]ees and expenses cannot be negotiated, pursuant to this method of procurement see: N.J.S.A. 40A:11-4.1 et seq.[4] "
On March 31, 2017, the County issued Clarification #1 to the RFP that included a response to FCR's question that asked the following about disposal of residue identified as "Type 10"[5] waste:
Any payments due Proposer for residue disposal. Can County please clarify this bullet? Does County mean if a municipality delivers a contaminated load? In the past we understand there have been mistaken deliveries.... We understand municipalities have taken the material back, but if not, then the . . . waste would need to be disposed of by the successful Respondent and the municipalities will be charged for handling and disposal.
In response to those inquiries, the County stated the RFP was clarified to read, "Any payment due proposer for residue disposal shall be factored into the ACR consideration." (Emphasis added).
The Clarification also responded to an inquiry that asked "[i]s the Contractor responsible for a mutually agreed upon residue percentage, and will the Contractor be compensated accordingly if the residue exceeds that percentage?" The County's answer read, "[t]he proposer shall be responsible to provide their initial residue percentage of composition within Attachment A. Composition values for residue will be mutually agreed to be increased/decreased upon completion of composition audits to be performed throughout the term of the contract." (Emphasis added).
The Clarification also fixed the maximum amount to be paid to a successful bidder if the ACR threshold was not met. The Clarification stated the following:
In other words, if the value of the recyclable materials fell below the ACR threshold, a defined amount of the difference would be charged to the County.
On April 13, 2017, FCR, which operates a "Class A" facility that is prohibited from accepting waste other than recyclables, was the only bidder to respond to the RFP. In FCR's Proposal, FCR recognized that residue is to be anticipated within loads of recyclable materials due to "confusion by users and what is acceptable, wishful recycling or apathy." The Proposal also included a discussion by FCR about market conditions, which it described as being worse than in the past. It stated that "[u]ntil very recently, the past few years proved to be the most challenging period in the history of recycling." It explained that "[m]arket commodity values dropped further and for a longer period than ever before." It also pointed out that "[r]ecyclables which once generated surplus revenue often failed to cover costs." For that reason, FCR described the protection its Proposal provided through "Floor Values" that would "be available to support the contract if markets become unfavorable," and explained that it was "very important" to consider the "financial strength" of a bidder to ensure it could provide that type of protection.
According to the Proposal, FCR followed Clarification # 1's direction and incorporated the cost of disposal of residue into its bid. The incorporation of that cost was explained in FCR's supporting materials, which contemplated that under certain circumstances the County would be billed for disposal of all materials, recyclable or residue, where a threshold of revenue, calculated to include a reduction for an "Initial Residue Consideration," was not realized upon FCR's sale of the recyclable materials.
Specifically the Proposal stated that revenue sharing between [FCR] and participating municipalities is based on actual market prices received from the sale of recovered commodities from the Camden facility. On a monthly basis the actual commodity prices for that month are applied to the County's material composition percentages to determine the [ACR] which in turn is used to calculate the Revenue Share payment amount as described in the Cost Proposal section of this proposal.
Although FCR's "Pricing Proposal" was required to "indicate [its] facility's initial proposed composition and pricing as offered by the facility in January 2017," it did not set forth the initial residue percentage but instead included only an "Initial Residue Consideration" of $49.79 per ton based upon 11.24% residue. According to Attachment A to the Price Proposal, those amounts were incorporated as reductions to the calculation of the "Single Stream ACR Calculation/Month." FCR also set the ACR Threshold to be $70.00.
The Proposal also set the "Maximum Floor Value" at five dollars per ton, which would be the costs to the County or member when the ACR is below the...
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